Thomas Spacing Mach. Co. v. Sec. Trust Co.

• Decision Date: 04 June 1923
• Docket Number: No. 38.,38.
• Citation: 223 Mich. 164,193 N.W. 790
• Parties: THOMAS SPACING MACH. CO. v. SECURITY TRUST CO.
• Court: Michigan Supreme Court

223 Mich. 164

193 N.W. 790

THOMAS SPACING MACH. CO.

v.SECURITY TRUST CO.

No. 38.

Supreme Court of Michigan.

June 4, 1923.

Appeal from Circuit Court, Wayne County, in Chancery; Ira W. Jayne, Judge.

Petition by the Thomas Spacing Machine Company against the Security Trust Company, receiver of the Detroit Structural Steel Company, for the establishment of a claim against the receivership estate. There was a decree allowing the claim, and the receiver appeals. Reversed, and petition dismissed.

Argued before WIEST, C. J., and FELLOWS, McDONALD, CLARK, BIRD, SHARPE, MOORE, and STEERE, JJ. Butzel, O'Brien, Levin & Winston, of Detroit (A. J. Levin, of Detroit, of counsel), for appellant.

Oxtoby, Robison & Hull, of Detroit, for appellee.

WIEST, C. J.

The Security Trust Company is receiver of the Detroit Structural Steel Company. The Thomas Spacing Machine Company, by the petition herein, asked the court to direct the receiver to return to it certain machinery sold by it to the Detroit Structural Steel Company under a claimed conditional sales contract. The original purpose of petitioner, in asking for such return, was to obtain the machinery, sell it, give credit for payments received, and prove the amount then remaining due on the contract as a liquidated claim against the assets in the hands of the receiver. Petitioner had before this filed a claim with the receiver, under the contract, for unliquidated damages, and therein declared the intention to file this petition.

The receiver denied the right of petitioner to have the machinery returned, claiming the contract in question was a sale of the machinery, reserving security in the nature of a chattel mortgage, and such security was void as to creditors of the Detroit Structural Steel Company for failure to record the same, as provided by section 11985 et seq., C. L. 1915. Other defenses were set up by the receiver, but as the case must be decided upon the one mentioned we find no occasion to discuss such other questions.

The provisions of the contract bearing on the issue are as follows:

‘The title to the above-described property is now owned by the said first party, and is only to become the property of the said second party on and after full payment therefor by the second party of the consideration or sum of eleven thousand ($11,000) dollars. * * * In case of failure to pay all or part of said contract price as above stated, or any attempt to remove said above-described personal property in violation of the terms and conditions hereof, the said first party shall be at liberty at that time, and it is hereby authorized to enter into and upon any place or places where said personal property may then be, and retake the same, and cancel, at its election, this agreement, and to retain all payments made for the use of that time by the second party hereto of the said property, and the expense in retaking the same and all statutory provisions applicable to this contract for the benefit of the second party are hereby waived.

‘It is further stipulated and agreed between the parties that title to the above-described personal property shall be and remain in the said first party until the whole of the contract price, due and payable hereunder, is fully paid by the said second party, and it is further stipulated and agreed that in event of default by the said second party in the performance of any of the covenants and agreements herein stated to be performed upon its part, that the whole of the above contract price shall become due and payable forthwith.’

In the circuit this contract was held to constitute a conditional sale only, and as the property had been sold by the receiver under agreement and in pursuance of an order preserving rights of all parties, the receiver was ordered to pay petitioner $4,000, the amount remaining due on the contract. The receiver is here by appeal.

At the time of decision in the circuit, our decisions in Heyman Co. v. Buck, 221 Mich. 225, 190 N. W. 631, and Phillips-Michigan Co. v. Field Body Corporation, 221 Mich. 17, 190 N. W. 682, had not been reported, but came to the attention of the trial judge before certifying the case to this court. In the certificate the trial judge states:

‘It would appear under the rule established by those cases for differentiating between a conditional sales agreement and an agreement passing title and reserving lien, that the contract under discussion here should have been construed as an agreement passing title and...